Supreme Court OKs pension payments

Florida’s budget will be better off, but more changes could be in store for public employee benefits following Thursday’s Florida Supreme Court ruling upholding the state’s move to make government workers pay 3 percent of their annual salaries toward their pensions.

The 4-3 ruling is a policy victory for Gov. Rick Scott and legislative leaders, who would have had to scramble to come up with $1 billion for the state budget if the court had invalidated the 2011 pension law. It also creates more momentum for future changes in the state retirement system, including the possibility of eventually ending the traditional pension fund for new workers.

The decision is a defeat for more than 600,000 public workers — including nearly 21,000 in Sarasota, Manatee and Charlotte counties — ranging from state workers to local school employees to firefighters and other county workers who rely on the $127 billion state pension fund for their retirement.

For state workers, it means they will continue to pay 3 percent of their salaries for the pension, while they have gone more than six years without a pay increase. It also eliminates any cost-of-living increases for retirement benefits earned after July 1, 2011.

“Balancing the state budget on the backs of middle-class working families is the wrong approach for legislative leaders and the governor to take,” said Andy Ford, head of the Florida Education Association, a teachers’ union that led the challenge of the pension law.

The 3 percent amounts to about $1,151 annually for the average government worker in Southwest Florida.

Legislative leaders and Scott praised the decision, saying it validates their argument that public workers should pay for part of their retirement plans and it removes a major financial question from the state budget.

House Speaker Will Weatherford, R-Wesley Chapel, who has suggested that the state shift new workers from the traditional pension plan to a 401(k)-type system, called the ruling “a decisive victory for taxpayers.”

Senate President Don Gaetz, R-Niceville, said the decision reflected the state’s “efforts to maintain a sound retirement system...as well as the reality that Florida taxpayers can no longer bear the full cost of this benefit.”

Politically, the move may have alienated thousands of government workers. But state leaders seemed to be banking on the fact that pensions like those offered to government workers are now rare in the private sector, where workers have seen retirement benefits eroding for more than two decades.

State Sen. Nancy Detert, R-Venice, noted the discrepancy. “I think it’s fair,” Detert said. “They should be glad they even have a pension they can contribute to.”

In passing the law, legislative leaders had cited the fact that Florida was the only state that did not require its employees to contribute the pension fund — a decision that was made in 1974.

Scott, who has repeatedly raised questions about the financial viability of the state pension and had previously backed a 5 percent contribution plan, said the opinion “supports our efforts to lower the cost of living for Florida families.”

“This means even more businesses will locate and grow in our state, which creates even more opportunities for Floridians to live their version of the American dream,” Scott said.

Senate Budget Chairman Joe Negron, R-Stuart, said if the state had lost the ruling, he would have recommended that the workers be immediately repaid their 3 percent contributions plus interest. It would have forced lawmakers to find more than $1 billion in the current budget, with further implications for the next state budget.

An adverse ruling would have also impacted county governments. It was estimated last spring that reimbursing the county workers who rely on the state pension would have cost counties an estimated $600 million.

But workers’ advocates disputed the notion that the pension payments were designed to bolster the financial viability of the pension fund.

Ron Meyer, a lawyer who represented the teachers’ union in the dispute, called the argument “bogus.”

“It had nothing to do with funding the pension program,” he said. “It was all about making up the budget deficit on the backs of state workers.”

As for Scott’s assertion the ruling will help Florida’s economy, Meyer said the public workers, including teachers and police officers, “can scarcely afford a 3 percent reduction in their pay.”

“It’s certainly not benefiting their economy,” he said.

In the longer term, Meyer said lawmakers could use the ruling to impose higher contribution rates on public workers.

“If they came in and said we have to take 10 percent, 15 percent, I suppose constitutionally they would be empowered to do just that,” Meyer said. “Whether you’re going to see further punitive changes to public employee salaries and benefits, I leave to the future to hold. I don’t know.”

But Meyer said the ruling, with its financial benefits to the state budget, should raise the priority of providing a pay increase to state workers, who have gone without a general raise since October 2006.

“These people haven’t had a raise in many years,” Meyer said. “And the only change in their salaries that they have had is a 3 percent reduction.”

Negron, the Senate budget chief, said worker pay will be “one of many issues we'll have to consider in the months ahead.”

Jeanette Wynn, president of the local council for the American Federation of State, County and Municipal Employees, lamented the ruling’s impact on eliminating any cost-of-living adjustment for retirement benefits earned after July 2011.

She said that portion of the decision means for workers, who earn an average pension of $16,000 a year, that their benefits “will no longer be adjusted for inflation but will be eaten away year after year.”

Wynn said she hopes the decision will cause lawmakers back away from other pension changes, including moving new workers into a 401(k)-type plan.

“We urge the Legislature to refrain from any more major changes to what remains one of the best funded pension systems in the world,” she said.

The head of the state’s major teachers’ union, the Florida Education Association , said the ruling will hurt teachers, firefighers and other public workers and predicted the ruling could become part of the 2014 elections.

“This is disappointing news for those who work to make Florida a better place,” Andy Ford said in a statement. “Balancing the state budget on the backs of middle-class working families is the wrong approach for legislative leaders and the governor to take. We’re disappointed that the state’s highest court said this approach was legal.

“I believe our arguments were correct, even if the justices didn’t agree. We still believe that a promise is a promise,” Ford said. “We are more determined than ever to change the face of the Florida Legislature. The next elections in 2014 can turn this decision around.”

Lloyd Dunkelberger

Lloyd Dunkelberger is the Htpolitics.com Capital Bureau Chief.
He can be reached by email or call 850 556-3542.
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Last modified: January 17, 2013
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